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Market View

Calm start for FX markets into the new week

Monday, March 26, 2012 4:09 AM GMT

Good Morning,

- Calm start for FX markets into the new week with Germany's IFO also the only notable data release today. Comments from various central bankers and politicians are already increasing ahead of the EU27 finance ministers and central bankers in Copenhagen this Friday.

- Stocks: Nikkei +0.22 %, Hang Seng -0.11 %, Shanghai Composite Dow Jones +0.27 %, S+P500 +0.31 %

- Italy's Prime Minister Mario Monti warned that Spain could reignite the European debt crisis as euro-area ministers this week prepare a deal to strengthen the region's financial firewall. Monti pointed to Spain's struggle to control its finances ahead of a finance ministers meeting in Copenhagen starting on March 30, where officials will seek agreement to raise a 500 billion-euro ceiling on bailout funding.

- German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble have abandoned their opposition to combining the two euro-area rescue funds, Der Spiegel reported, citing unnamed government officials. The two German leaders have agreed that the permanent and temporary rescue funds may be "held in operation" for a transitional period, the magazine said in an e-mailed preview of its article.

- European Union Economic and Monetary Affairs Commissioner Olli Rehn said the region will toughen debt-crisis defenses to guard against future risks. "The key thing now is to conclude the comprehensive crisis response," Rehn told reporters yesterday in Saariselkae, Finland. Rehn said he trusts that euro-area finance ministers "will take a convincing decision on the reinforcement of the firewalls" next week.

- The European Central Bank won't provide more long-term loans until it has studied how the funds are distributed into the economy, council member Joerg Asmussen told newspaper Helsingin Sanomat.

- ECB Coeure said liquidity measures aimed at averting a credit-crunch in the euro area should cease when economic and market conditions permit. "All the tools necessary for large-scale liquidity withdrawal are already in place or will be readily available when needed," Coeure said, according to comments prepared for a speech in Tokyo today. "Monetary policy accommodation for prolonged periods of time might fuel excessive risk-taking, leverage and asset price bubbles."

- Andrew Haldane, the Bank of England's executive director for financial stability, said banks should shore up their capital as market conditions improve.

- China's foreign exchange reserves are "very adequate", Yi Gang, a deputy governor of China's central bank, told a forum held by the Caixin media group today:

  • China may see more private holdings of foreign exchange funds as the yuan's exchange rate approaches an equilibrium level, Yi says

  • China doesn't plan to grant the yuan a more favorable status compared with other currencies, while it makes the currency more internationalized, Yi says

  • China should reform exchange rate mechanism with yuan's appreciation pace gradually reduced and floating in a two- way manner, Yi says


- The People's Bank of China fixed the yuan's mid-point versus the dollar at 6.2858 on Monday. It was the highest fixing since the landmark revaluation in 2005.



New Zealand Data Recap Period Survey Actual Prior Revised
Trade Balance Feb 153m 161n -199m -159m
Exports Feb 3.93b 3.59m 3.74b 3.73b
Imports Feb 3.65b 3.43b 3.94b 3.89b


- IMM Positions: EUR -83k vs -99k, JPY -26k vs -42k, CHF -11k vs -15k, GBP -16k vs -42k, CAD 42k vs 27k, AUD 45k vs 67k, NZD 4k vs 13k

- 14.30 US Chicago Fed Nat Activity Index Feb
- 16.00 US Pending Homes Sales Feb
- 16.30 US Dalles Fed Manf Activity Mar
- 13.00 Fed Plosser
- 14.00 Fed Bernanke
- 10.00 Germany IFO Mar

- 10.00 Italy Consumer Confidence Mar
- 18.00 ECB Draghi
- 22.45 BOE Miles


Have a good start !

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